Will Alternative Energy Ever Go Mainstream?
Jan 5th 2012 11:20AM
Updated Jan 5th 2012 4:18PM
The problem in evaluating various forms of power is that two critical elements of the debate -- the true costs of production and the efficiency of the energy source -- are often ignored, or wind up buried beneath "statistics" designed to sway the heart instead of the brain. In many cases, an ignorant public and a highly divided political system simply demonize what they barely understand. Let's try to ignore the talking heads for a while and look at the numbers at ground level.
A pressing need
Renewable energy's support is often based on hope and hype, promising freedom from polluting hydrocarbons and the nasty terrorist-harboring petrostates that control them. But that hope ignores the reality, which is that we need to power our many devices quickly, cheaply, and consistently, and we need to do it right now. Alternative energy is not yet up to the task, and so hydrocarbon alternatives remain (for now) on the fringes, as the U.S. Energy Information Administration's data show:
2010 U.S. Power Consumption (million bbl. oil equivalent)
Percentage of U.S. Power Consumption
|Oil and gas||10,012||63.2%|
Source: U.S. Energy Information Administration.
The biofuel category seems respectably sized until one realizes that it includes anything based on bio-stuff, including trash-burning power plants and the corn ethanol foisted on you at the pump. Wind and solar have a long way to go.
You say you want a revolution
None of that should matter if alternative energy can one day rise to the challenge and beat hydrocarbons at their own game. I've written before about why solar energy isn't doomed, but it has a long way to go. All of our alternative energy options do. Journalist Robert Bryce's number-crunching in Power Hungry offers laymen an easy-to-understand view of the energy reality. What he found convinced him that when it comes to efficiency, the best option might be the one the world is currently most afraid of.
Area Required to Generate 2,700 Megawatts
|South Texas Nuclear Project Plant||18.75 square miles||300 hp/acre (56 watts/sq. meter)|
|Average U.S. natural gas well||19.6 square miles||287.5 hp/acre (53 watts/sq. meter)|
|Oil stripper well (10 bbl./day)||39 square miles||148.5 hp/acre (27 watts/sq. meter)|
|Solar (photovoltaic)||156 square miles||36 hp/acre (6.7 watts/ sq. meter)|
|Wind||869 square miles||6.4 hp/acre (1.2 watts/sq. meter)|
|Biomass-fueled power plant||2,606 square miles||2.1 hp/acre (0.4 watts/sq. meter)|
|Corn ethanol||21,267 square miles||0.25 hp/acre (0.05 watts/sq. meter)|
Source: Robert Bryce, Power Hungry.
Major oil and gas drilling installations, such as Chevron's Petronius offshore platform, can easily roar past nuclear in terms of potential power density. Such platforms, though, are wholly dependent on striking a massive gusher beneath the surface. It's clear that nuclear power requires the smallest footprint out of the available hydrocarbon alternatives. Nuclear even bests many oil producers for efficiency. SandRidge Energy (NYS: SD) operates over 3,000 oil wells in the Permian Basin, but each is individually less than half as efficient as a nuclear plant.
Despite this evidence, we're not likely to see much new nuclear construction for a few years. The world's hysterical overreaction to the Fukushima disaster made that clear. A nuclear-energy winter doesn't necessarily harm Exelon (NYS: EXC) and other nuke-reliant utilities, but uranium miners are likely to be left in the cold until the world comes to its senses.
Green rogue's gallery
The flight from nuclear power is hastening "energy sprawl," a phrase coined by the Nature Conservancy in reference to the much larger physical footprints needed to generate renewable power. The issue could become so acute by 2030 that an area the size of Minnesota would be required for domestic energy production.
The worst offenders, as you might expect, are corn ethanol and other biofuels. Corn ethanol has gotten major support from oil refiners Valero Energy (NYS: VLO) and Marathon Oil (NYS: MRO) , which both own ethanol plants. But the political tide finally seems to be turning, as Congress let a $0.45-per-gallon ethanol subsidy lapse in the final days of 2011.
Niche biofuel producers seem to have bigger problems. Range Fuels, a "forest wastes" producer supported by the Bush administration's Department of Energy, went belly-up this year. Gevo (NAS: GEVO) , a similarly styled bio-refiner receiving similar levels of government support, is finding its strategy difficult to implement and has shifted to corn-based production.
Wind and solar have more than one way to increase energy sprawl. Bryce points out that the size of an installation is only part of the problem:
Some 40,000 miles of new lines will be needed by the wind sector alone. If we assume that each of these transmission lines requires a 100-foot-wide swath of right-of-way ... then those 40,000 miles of transmission lines will cover about 750 square miles of territory, which is about half the size of the state of Rhode Island.
Another problem is intermittency -- energy sources that can't always be "on" when you need them. Any excess power generated by wind and solar has to be quickly sold (if possible), as there's no technology available that offers efficient industrial-strength long-term energy storage. Nanotechnology might one day break down that wall, but tomorrow's energy storage solutions have been on the horizon for ages.
What investors can do now
If you want to put your money in clean energy, you should invest in what gives the most bang for the buck. After all, says Nature Conservancy scientist Robert McDonald, "saving energy saves land." Petroleum's still the most efficient form of energy to invest in right now, and its price is unlikely to drop any time soon. Find out how you can take advantage of this booming market with the Motley Fool's free report on three companies striking gushers with $100-per-barrel oil prices. Don't get left behind -- reserve your free copy day.
At the time this article was published Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter for more news and insights. Motley Fool newsletter services have recommended buying shares of Chevron, and Exelon. Motley Fool newsletter services have recommended creating a write covered strangle position in Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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